Microsoft (NASDAQ:MSFT) threw out so many new ideas, concepts, and products at its Windows 10 event WJanuary 21st that the changes the new operating system brings to Windows Phone were somewhat lost in the shuffle.
While it's not as sexy as holograms, a new Web browser, or being able to play Xbox games on your PC, the new OS might have its biggest immediate impact on Windows Phone. Windows 10 will give people a logical reason to buy Microsoft's phones. It will also remove what has been one of the main reasons customers have cited for not buying the company's smartphones -- the lack of apps.
Windows 10 breathes new life into a product line where Microsoft has languished in third place behind Apple's (NASDAQ:AAPL) iPhones and phones running Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) operating system.
One Windows to rule them all
The operating system for Windows Phone 8 is entirely different from the one running on Windows laptops, desktops, and tablets. Windows 10, however, will be a single operating system that works across the full spectrum of the company's devices.
"Windows 10 will support the broadest device family ever," said Terry Myerson, head of Microsoft's Windows division. "Windows 10 on tablets, phablets, and phones will provide the best mobile experience."
With its "One Windows" approach, Microsoft has delivered an operating system that offers something no other company has delivered. Windows 10 has been designed to make moving from computer to phone to tablet, even to Xbox, seamless.
Apps sold in the Windows store will work across all platforms, and they will be optimized for the device you are using. That makes it easier, for example, to start a Word document or an Excel spreadsheet at home, then continue working on it on your phone or tablet elsewhere. Perhaps equally importantly, it also means you can start playing Minecraft on your phone and then bring the same game to your computer, tablet, or desktop.
Having an OS that works across all platforms could give Microsoft an edge with its key audience of business customers. Many of those people use Windows-based machines at work, but have iPhones or Android handsets. Offering a phone that delivers smooth integration between work and mobile should entice some people to switch.
The Windows phone universe just became much bigger
One of the bigger complaints about Windows Phone has been the lack of apps. Developers have been slow to create apps for Microsoft's phone platform because the company has a tiny user base compared to its rivals, as the chart below shows.
|Period||Android||iOS||Windows Phone||BlackBerry OS||Others|
In 2014, IDC reported, about 1.3 billion phones shipped globally, powered primarily by Android and, to a lesser extent, iOS. That made it much more logical for developers to build Android and iOS apps for a much larger customer base than Windows Phone's.
Having the same operating system work across all Windows devices, however, dramatically and immediately increases the market for WIndows 10 apps. It will also help that Microsoft is offering a free upgrade for Windows 7 and 8 users to the new OS. (Though the company does appear to be hinting at a subscription model for Windows after a "free year.")
Microsoft's goal is to move as many of its users as possible to the new platform to avoid the fragmented audience seen in recent years, with users split between Windows XP, 7, 8, and 8.1. The company posted a slide during the event that said 1.5 billion people worldwide use Windows, so even if only 25% take up the new OS in the first year, that's a huge jump in audience for any potential Windows 10 app.
The numbers are likely to be higher since WIndows 10 will be a comfortable, familiar interface for the 56.2% of Microsoft's user base that still uses Windows 7, according to NetMarketShare as of December. Add in the roughly 13.5% using the not-well-liked Windows 8 and there should be more than enough people using Windows 10 for developers to create and port apps to the platform.
Keeping existing customer happy
Perhaps the biggest thing Microsoft announced Wednesday is that Windows 10 will work on current Windows phones. That was not the case when Windows Phone 8 launched and users of older Windows Phones could not upgrade without buying a new device.
That sent me -- a former Windows Phone devotee -- to an iPhone, and it essentially made every Windows Phone customer a free agent as few were likely to stay too long on an abandoned platform.
This time, Microsoft is not only offering a free upgrade, it is offering one to an OS that will have more apps and easier integration with other Windows devices. That should keep current customers in the fold and attract new users.
Windows 10 makes a phone just another device in the Microsoft ecosystem, and that's a good thing for the company. If a phone becomes a seamless extension of the computer or tablet, then Windows Phone now has around 1.5 billion potential new customers.
Daniel Kline owns shares of Apple and Microsoft. He really wants a WIndows phone with a physical keyboard, which is no longer a thing. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.